Definition of Sustainability Sustainability
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from time to time and level of basic economic needs also differs frequently. Thus, ensuring the three pillars are well-satisfied cannot be conducted without participation
of stakeholders and well-determined corporate green strategies. Furthermore, research conducted by Deloitte indicates the major respondents
modeled definition of sustainability after the concept of TBL -pursuing performance in economic, social, and environmental aspects Deloitte, 2010. Notwithstanding,
some respondents define it as framework of companys policies and goals, which led to widely disparate areas of emphasis among themselves as a whole. It implies the
significance of achieving sustainable business should integrate three pillars altogether, while the company’s policies should be in accordance with its goals.
1 Performance Measurement of Economic Sustainability
The management process from planning, execution, and evaluation will result in measurement of performance as a whole.
To improve competencies and gain competitive advantage, a firm should gradually reach a higher point and by then
requiring holistic measurement to assure if objectives are met. Corporate performance is defined as the organization’s ability to attain its goals by using resources in an
efficient and effective manner Fauzi et al., 2010. Then a question arises: What are indicators to measure corporate performance?
Generally speaking, the concept of corporate performance primarily points out to financial instruments such as profit, revenues, return on assets ROA and
economic value added EVA, naming after the so called “the bottom line”. In this regard, the aforementioned profit is net profit which is gained from gross profit minus
overheads minus interest payable for a given time period Wikipedia.org. In addition, revenue is the income that a company gains from its normal business activities,
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usually from sale of goods andor services Wikipedia.org. Return on assets indicates how profitable a company is relative to its total assets Investopedia.com, 2011. The
net income gained from companys business activities divided with its total assets. Economic value added is a measure of a firms financial performance based on the
residual wealth calculated by deducting cost of capital from its operating profit. The formula for calculating EVA = Net Operating Profit after Taxes - Capital Cost of
Capital. On the other hand, Fauzi et al. 2010 hold market mechanism as the heart of
corporate performance by which the company deals with the financial, factor, and customer product markets. In the financial market, management utilizes corporate
performance to meet interests of shareholders and creditors. In the factor market, the corporate strives to build good relationship with suppliers and other production
owners by employing relative bargaining power that benefits both parties. Finally, from customer product markets point of view, a corporations ability to deliver value
to customers and generate revenue is the critical point for corporate performance. The road to reach economic sustainability is not merely linear. It involves
multi-dimensional framework, of which the decision to be economically sustainable is not always approved by certain group of stakeholders. Therefore, integrating
strategies that possibly realize sustainability agenda with the approval of stakeholders’ agreement becomes complex consideration. Once the boardroom men approve to
become sustainable, management confuses with measurement, of which further develop their own standards. To make the situation clear, some sort of propositions
towards measurement performance on sustainability is presented below. To narrow the research, this study focuses only on economic sustainability.
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a Economic Performance
The basic goal of business is profit maximization. This neoclassical theory strives to satisfy fiduciary stakeholders, primarily falls into shareholders, creditors,
and other parties that have contractual ties. Fauzi et al. 2010 assert that “higher financial performance leads to the increase in wealth of these stakeholders”.
Furthermore, financial performance can be measured by employing three alternative approaches, such as market-based measure, accounting-based measure,
and perceptual-based measure Fauzi et al., 2010. Firstly, in market-based approach, “the market value of a company is derived from the stock price, all of which is used to
measure CFP” Fauzi et al., 2010. This notion concerns heavily on shareholders’ interests.
Secondly, the accounting-based approach is derived from “a company’s competitive effectiveness and a competitive internal efficiency as well as optimal
utilization of assets, for some certain measures” Fauzi et al., 2010. Financial tools such as net income, return on assets ROA, and return on equity ROE are the basic
proponents of this approach. Thirdly, in perceptual method, some personal judgments for financial performance will be exercised by respondents using some instruments,
such as ROA, ROE, and the financial position relative to other companies. Furthermore, Sebhatu adds market share, sales turnover, and sales as complementary
for financial performance.